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A former head of public works for the City of Montreal, Robert Marcil, told Quebec's corruption inquiry Monday that he knew nothing about bureaucrats working under his command taking bribes.

Dinners, bottles of wine and cognac, golf tournaments and hockey tickets, all paid for by construction bosses with whom his department did business, were another matter entirely, however.

Marcil said it was common practice dating back decades in municipalities all across Quebec for engineers in his position of authority to accept "small gifts" from entrepreneurs.

"It's all part of good business relations," Marcil told commission counsel Denis Gallant.

"It wasn't when I came to work for Montreal that I received my first bottle of wine and attended my first golf tournament," he went on. "When I worked for (the former City of) Lasalle, it was exactly the same thing. When I worked in St. Jerôme. When I was in business, it was me who was inviting clients to lunch, it was me who had bottles of wine to give as gifts to ministry of transport officials for Christmas."

Marcil went on to describe a convivial practise in which mayors and borough mayors hosted golf tournaments, attended by city employees, construction bosses, their lawyers and accountants.

He said entrepreneurs hosted tournaments, as well.

"I don't have a list of all the golf tournaments," he said, shrugging, when asked whose events he'd attended. He mentioned Catania as one host, but added, "It could also be suppliers — suppliers of cement, suppliers of pipes, suppliers of rock — they all gave out invitations."

"You can ask in 2013 whether this is ethical," he said. "But you have to put things in perspective. It's a way of doing business that's existed in the province for a very, very, very long time."

So, too, was the practise of going out for dinner once or twice a year with a construction boss, always at the entrepreneur's expense. Marcil said in return, he'd do small favours for the entrepreneurs, calling up the city's finance department, for example, to find out when a contractor could expect a cheque.

He said he wasn't the only senior administrator taking such calls.

"I hope they weren't all having 90 minute or two hour lunches," said commission chair France Charbonneau sarcastically. "It would have cost the city dearly, to take care of business for those entrepreneurs."

Stunned to learn of bribes: Marcil

Earlier, the commission heard how engineers working in Marcil's department — notably Gilles Surprenant, who was in charge of sewer and water main projects — estimated construction costs.

Surprenant described last fall how the software used to help estimate construction costs could be tricked into inflating those estimates over time.

Marcil insisted he made sure that Surprenant was adequately supervised.

Still, he told the commission, he was stunned to learn that Surprenant had accepted hundreds of thousands of dollars in bribes.

"We had no knowledge of that whatsoever," he said.

Late in the day, Marcil was shown transcripts of phone calls he made to a certain Robert Lapointe, recorded by police as part of Operation Diligence, an investigation into organized crime.

The transcripts indicate Marcil wanted to drop by Lapointe's office, to give him documents.

Commission counsel advised Marcil to speak to his lawyer about those phone calls, in preparation for Tuesday's testimony.

City aware of inflated contracts for years

Earlier Monday, the commission heard that senior administrators at the City of Montreal knew as far back as 1997 that the city was paying inflated prices for its public works contracts but failed to act on that information.

Commission investigator and analyst Guy Desrosiers examined a series of internal reports provided to successive administrators, in 1997, 2004, 2006 and 2010.

He said they all used different words but contained the same essential message: that Montreal was paying more than other cities for construction projects and that it had no mechanism to prevent collusion among construction contractors.

An internal auditor noticed in 2005 strong indications of collusion between two main contractors, Sintra Inc. and DJL Construction Inc. Desrosiers said.

He testified that the findings were so sensitive, the city's internal auditor, Denis Savard, did not include them in a public report but sent them separately to the then-newly appointed executive-director of the city, Claude Léger, in an 11-page letter marked "confidential."

The two main players "had a strategy [aimed at] distorting fair competition from competitors trying to bid and win contracts outside the geographic territory staked out by the big firms," Desrosiers said, citing Savard's report.

'Conducive conditions' for collusion

He said the report examined the ownership structure of the six main firms that won contracts in 2005, noting all had direct or indirect links to another of the winning firms — essentially enabling them to act as a single enterprise.

Simard-Beaudry Construction and Construction Louisburg, for example, were both owned by Antonio Accurso.

The confidential letter also showed that 96.35 per cent of the city's contracts went to local entrepreneurs, as compared to 70 per cent of bids received by Quebec City.

In spite of the "conducive conditions," the city departments examined by the auditor had "no controls in place to detect and prevent collusion, fraud and conflict of interest," Savard's report said.

Without those controls, the auditor concluded, it was impossible for the city to reduce the inflated costs.

Sewers and pipes

In 2009, a report examining sewers and aquaducts concluded the City of Montreal was paying 85 per cent more than other cities in Quebec for similar work.

CGT, the engineering consultants hired to undertake that report, said the work was of inferior quality and made several recommendations aimed at bringing costs down and speeding up the work.

CGT's report was revised at the request of the city administration a few months later, Desrosiers said.

The 2010 version of the report reached the same conclusion: that the city was paying 22.5 per cent more than Quebec City and Longueuil did for similar reconstruction work.

However, Desrosiers said, the language was toned down.

"The choice of words was changed at the request of the client," Desrosiers said.

Desrosiers said none of the reports he examined were ever made public.

Desrosiers said the first internal report he examined, from 1997, was submitted to City Council. Other reports went to senior administrators or to committees made up of those administrators.